(a) Identify five differences between ordinary shares and debentures. (b) On 1 July 2018 Maleka Ltd issues...
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Question:
(a) Identify five differences between ordinary shares and debentures.
(b) On 1 July 2018 Maleka Ltd issues $6 million in six-year debentures that pay interest every six months at a coupon rate of 8 percent. At the time of issuing the securities, the investors required rate of return was 6 percent. Interest expense is determined using the effective-interest method.
REQUIRED
(i) Determine the issue price of the debenture
(ii) Will the debenture be issued at premium or discount? Why?
(iii) Provide the journal entries on 1 July 2018, 30 June 2019, & 30 June 2020
Related Book For
Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller
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